One year after the initial announcement, BASF has confirmed its ambitious climate targets. In an update for investors and financial analysts on its transformation roadmap, the company confirmed that it aims to reduce its greenhouse gas emissions by 25% by 2030 compared to 2018 and is sticking to its target of net zero emissions by 2050. Global emissions are to be reduced to 16.4 million tons by 2030. On the way there, BASF publishes an annual forecast ofCO2 emissions for the BASF Group with a corridor of plus/minus 0.5 million tons as part of its outlook.
"A brutal war is currently raging in Europe with far-reaching consequences for people and the economy. Nevertheless, we must not lose sight of the greatest global challenge of our time - climate change," said Dr. Martin Brudermüller, Chairman of the Board of Executive Directors of BASF SE. "We are working intensively across BASF on the implementation of a large number of projects to further significantly reduce ourCO2 emissions and achieve our ambitious climate targets. By working together with raw material suppliers, we are also tackling the reduction of our product-related emissions. In this way, we are driving forward our own transformation and at the same time supporting our customers in reducing emissions in their product portfolios."
Renewable energies as a key driver for emissions reduction
In 2021, BASF reducedCO2 emissions by around 3% compared to 2020 despite significantly higher production volumes. This is largely due to the increased use of renewable energies. The switch to renewable energy sources will be the main driver for reducing emissions by 2025. In 2021, renewable energy accounted for 16% of the BASF Group's global electricity demand. By 2030, the company expects 100% of its global electricity demand from 2021 to come from renewable sources.
To meet the demand for renewable energy, BASF is pursuing a make-and-buy strategy. This includes investing in its own plants to generate electricity from renewable sources and purchasing green electricity from third parties. In 2021, BASF acquired a share in the Hollandse Kust Zuid (HKZ) wind farm from Vattenfall. Once fully operational, it will be the largest offshore wind farm in the world with a total installed capacity of 1.5 gigawatts. The wind farm is expected to start commercial operation in 2023.
In addition, BASF has signed 25-year power purchase agreements with the energy companies ENGIE and Ørsted for the supply of large quantities of renewable electricity from wind and solar energy in Europe. In the USA, BASF has concluded long-term supply contracts for wind and solar power for the Freeport and Pasadena sites. In China, BASF has signed contracts with suppliers for the purchase of renewable electricity for its new Verbund site in Zhanjiang.
At its investor update event, BASF gave an overview of the various measures that are being implemented at the different sites. The different approaches depend to a large extent on the specific local conditions of each site.
Ludwigshafen: Development of new technologies and implementation of a new steam supply concept
Currently, around 50% of the steam required at the Ludwigshafen site is based on processes that causeCO2 emissions during steam generation. A new approach here is to generate steam using electricity. BASF is working with Siemens Energy on an initial project in the acetylene plant in which waste heat is processed using heat pumps and steam recompression so that it can be used as steam for the site's steam network. The integration of this heat pump project not only enables the production of around 60 tons of steam per hour, but also avoids around 160,000 tonsof CO2 emissions per year and reduces annual cooling water consumption by more than 20 million cubic meters. Commissioning of this technology is scheduled for the second quarter of 2024. The project also serves to gain experience in day-to-day operations in order to simplify its introduction at other sites in the future.
Another project being driven forward at the Ludwigshafen site is the development of an electrically heated steam cracker. Currently, the cracker furnaces are heated with gas and produce about one ton ofCO2 per ton of olefin. BASF has agreed with SABIC and Linde to develop and pilot electrically heated steam cracker furnaces. The project for the construction of a multi-megawatt pilot plant in Ludwigshafen is progressing according to plan and is scheduled to go into operation in 2023, subject to a positive public funding decision. BASF is developing new processes such as methane pyrolysis for theCO2-free production of hydrogen.
Antwerp: Aiming to become the first net-zero Verbund site by 2030
The BASF Verbund site in Antwerp is the largest chemical production site in Belgium and BASF's second largest Verbund site after Ludwigshafen. BASF aims to reduce emissions at the Antwerp site from 3.8 million tons in 2021 to close to zero in 2030. This could be achieved through a combination of importing green electricity from offshore wind farms, the use of new, low-emission technologies and a planned large-scale CCS project in the port of Antwerp. If successful, the Antwerp site would be the first petrochemical site to approach net zero emissions in 2030. However, given the short timeframe, this is a challenge that requires political support in order to create the necessary framework conditions.
Zhanjiang: planned as a pioneer in sustainability from the outset
Zhanjiang is to become BASF's third largest Verbund site. An advanced Verbund concept and the use of renewable energies will make a decisive contribution to significantly reducing the site'sCO2 emissions compared to a gas-powered petrochemical site. Replacing fossil energy with electricity from renewable sources is a key lever.
A few days ago, BASF signed a second 25-year framework agreement with State Power Investment Corporation Limited (SPIC) under the new renewable energy trading rules in the Chinese province of Guangdong. This is to secure the power supply from renewable energy for the next phases of the Zhanjiang Verbund site in Guangdong Province. This agreement is the most comprehensive and longest framework agreement for the purchase of green electricity signed in China. With this agreement and the partnerships with other energy suppliers, BASF is pushing ahead with its plan to supply the entire Zhanjiang Verbund site with renewable electricity and to achieve a share of 100% by 2025, which is earlier than originally planned. BASF is a pioneer in the use of renewable electricity in the manufacturing industry in China.
Schwarzheide: prototype for the transformation at medium-sized sites
In February 2022, BASF Schwarzheide GmbH and enviaM founded a joint venture for the construction of a solar park. The expected electricity production is 25 gigawatt hours per year; this corresponds to around 10% of the site's current annual electricity requirements. It will be the first major solar park in which BASF is directly involved. The solar power can be used for the production of battery materials for electromobility, which will be manufactured in Schwarzheide from the end of 2022. The modernization of the gas and steam turbine power plant at the site is almost complete. When it goes into operation at the end of 2022, it will produce 10% more electricity with 16% lessCO2 emissions thanks to more efficient fuel utilization.
Next step: BASF can offer customers its first net-zero and low-PCF products
"BASF is making good progress towards achieving its emission reduction targets. And we are ready to go one step further - towards sustainable growth through products with a reducedcarbon footprint," said Brudermüller. By using green electricity, low-carbon steam, renewable raw materials and highly efficient processes, BASF is able to offer its customers net-zero products and products with a low product carbon footprint (PCF). The company expects that demand for such products will exceed supply in the medium term and that their market value will more than compensate for the higher production costs. BASF believes that end consumers will drive the shift towards net zero and low PCF consumer products as they increasingly demand alternatives to conventional consumer goods and want to make a personal contribution to reducing emissions. BASF therefore wants to be among the first companies to offer as many products with a reducedcarbon footprint as possible in large quantities.
In order to achieve their own emissions targets, many BASF customers are striving to reduce the carbon footprint of their products. This requires a new level of transparency. BASF has therefore developed its own digital solution to calculate the PCFs for around 45,000 sales products. With this method, BASF currently has to use industrial averages and values from commercial databases as the basis for calculating the upstream Scope 3 emissions. In order to create more transparency in Scope 3 emissions, BASF is therefore working intensively with its suppliers to improve the data for the raw materials it purchases. BASF supports its suppliers by sharing knowledge about assessment and calculation methods. In this way, the company contributes to the standardization of PCF calculations.
Structured approach to capital expenditure
To develop the low-emission technologies and test them in pilot plants, BASF continues to expect investments of less than €1 billion for the period from 2021 to 2025. This amount is included in BASF's capital expenditure budget. Public funding has already been approved for some projects and a decision on others is expected shortly. In the five-year period from 2026 to 2030, investments are expected to increase to around 2 to 3 billion euros. During this period, BASF intends to implement the first new carbon management technologies on an industrial scale and accelerate the transition to renewable energies. The company then expects significantly higher investments after 2030 for the construction of production plants on a global scale in which the new technologies will be used, as well as for the further expansion of the use of renewable energies.
